The Blubber

Credit card debt jumped 14.5% in the fourth quarter up 2023, per CNBC.

Delinquency rates for credit cards and auto loans surged to their highest levels since the Great Recession, as revealed in a report released by the New York Fed on Tuesday.

Why it's important: The remarkable resilience of the American consumer has been a crucial factor in keeping the economy afloat, with signs of stress on household finances emerging as one of the few concerns in an otherwise robust U.S. economy.

The increase in delinquency rates suggests that the Federal Reserve's aggressive interest rate hikes are impacting consumers, particularly those grappling with the elevated cost of borrowing.

In the words of Wilbert van der Klaauw, an economic research adviser at the New York Fed, "Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels. This signals increased financial stress, especially among younger and lower-income households."

By the numbers: According to the New York Fed's quarterly report on household debt and credit, an annualized 8.5% of credit card balances and 7.7% of auto loan balances transitioned into delinquency status in the final months of 2023.

However: Delinquency rates for other types of debt, such as student loans and mortgages, remain below pre-pandemic levels.

Overall delinquency rates experienced a slight uptick to 3.1% in the fourth quarter, still 1.6 percentage points lower than the pre-pandemic level.

The New York Fed highlighted that missed federal student loan payments will not be reported until the end of this year, which keeps reported delinquency rates relatively low.

Read more; https://unusualwhales.com/news/delinquency-rates-on-credit-cards-and-auto-loans-spiked-to-their-highest-since-the-great-recession